The pula's crawling basket peg

Botswana's currency, the pula, is not freely floating: the Bank of Botswana pegs it to a basket of the South African rand and the IMF's special drawing right, and since 2005 the basket has been adjusted by a small, pre-announced 'crawl' that lets the pula depreciate slowly. The aim is to keep exports other than diamonds competitive despite Botswana's inflation being lower than that of South Africa and other trading partners, and to avoid the swings that strong diamond earnings could cause in the exchange rate. Diamond revenue is partly saved in the Pula Fund, a sovereign wealth fund managed by the central bank, so that income from a depleting resource is spread over time. The arrangement helps explain why Botswana's inflation and exchange-rate charts are unusually stable compared with those of other commodity exporters in the dataset.